The office market in Spain is experiencing a period of strong demand for high-quality, efficient, and well-located spaces, in a context marked by a shortage of prime product, particularly in the CBDs of Madrid and Barcelona. This lack of supply is creating growing upward pressure on rents, which have already surpassed historical levels and continue to show positive medium-term prospects.

Following the uncertainty generated during the pandemic and the rise of remote working, the market is now experiencing a gradual return to offices. However, the current supply of quality space is insufficient to satisfy current demand. Vacancy rates for Class A offices in the CBDs of Madrid and Barcelona remain below 1%, reflecting an extremely constrained market.

In Madrid, the shortage of new developments is particularly significant. Only three prime projects are expected to be delivered by 2027, adding just over 32,000 sqm to the market. These include Plaza de Chamberí 8, Alfonso XI 6, and Sor Ángela de la Cruz 6. Other landmark developments, such as the future transformation of Madrid’s Foster Tower, will also contribute to expanding supply, albeit on a limited scale.

This situation is pushing prime rents in Madrid up to €43.5/sqm per month, while peripheral areas continue to show more stable performance, except for high-quality, well-connected assets. During the first quarter, 89,000 sqm of office space was leased across more than 90 transactions, with most activity concentrated within the M-30 area and in premium-quality buildings, which generated over 70% of demand.

In Barcelona, office leasing activity reached 94,000 sqm, representing an 80% year-on-year increase, driven by major transactions such as those carried out by Sanofi and the Generalitat de Catalunya. More than half of this activity took place in the New Business Areas, while 70% of transactions involved Grade A and B+ buildings, confirming occupiers’ preference for spaces adapted to new working models.

Pressure on rents is also reinforced by the pricing gap with other European capitals, where rents remain significantly higher. In addition, the conversion of office assets into residential and hotel uses is further reducing supply in central locations, as these alternative uses often offer higher returns to investors.

This pattern is not unique to Spain and is also evident across Europe, where demand is increasingly concentrated in prime buildings and central locations, while new supply remains limited. As a result, prime rents in Europe have increased by 35.6% since 2019, consolidating a sustained growth scenario driven by the shortage of high-quality product.

At CG Capital Europe, we work hand in hand with international funds, institutional investors, and corporates to identify, structure, and execute real estate investment opportunities across all asset classes in Spain including offices, retail, living, hospitality and logistics. With privileged access to global capital, deep market insight, and a proven track record in complex transactions, we deliver strategic advisory services that enhance value creation and investment performance. Spain’s solid market fundamentals, together with investors’ growing appetite for prime and sustainable assets, continue to drive strong momentum in the sector, positioning CG Capital Europe as a trusted partner for those seeking to capture the most attractive opportunities in one of Europe’s most dynamic real estate markets.

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